Labor leader accused of fraud

HONOLULU — Gary Rodrigues, state director of the 12,000-member United Public Workers union, is charged in a federal grand jury indictment returned Wednesday with 43 counts of fraud, embezzlement and money laundering.

The indictment announced by U.S. attorney Steven Alm also names Rodrigues’ daughter, Robin Haunani Rodrigues Sabatini, in accusing the two of schemes to charge unauthorized consulting fees in connection with the union’s contracts for dental and medical services for members.

Rodrigues, a Kaua’i resident, could not be reached for comment Wednesday at the union’s headquarters and did not return an Associated Press call seeking comment.

Rodrigues, a Kaua’i native, commutes to Honolulu weekly for his UPW job.

His parents, Jack and Gertrude Rodrigues, and Gary Rodrigues’ daughter, Robin Sabatini, all live in Kapahi.

“We have nothing to say,” said Gertrude Rodrigues when reached at her home this morning.

Neither Sabatini, who lives on Kahuna Road and was contacted at home, nor Gary Rodrigues, who was out of his office, returned telephone calls from The Garden Island this morning seeking comment.

A penal summons will be issued to Rodrigues, 59, and Sabatini, 36, when a court date is set, Alm said.

Embezzlement and mail fraud counts carry a maximum penalty of five years in prison and a $250,000 fine. Defrauding a healthcare benefit program carries a maximum penalty of 10 years in prison and a $250,000 fine. Money-laundering conspiracy counts carry a maximum penalty of 20 years in prison and a fine of up to $500,000.

As UPW’s lead negotiator, Rodrigues made contracts with Hawai’i Dental Service and with Pacific Group Medical Association (PGMA), a medical insurance company, to provide services for UPW members, Alm said.

“What he neglected to tell the UPW, both the executive board and the membership, was that he had included consulting fees as part of the contracts and he set his daughter and her company up primarily to receive those consulting fees,” Alm said. “So in these schemes, the UPW members were paying for the consulting fees without their knowledge. That’s where the embezzlement comes in and the theft from the UPW in both of those.”

The money-laundering charges deal with moving at least $200,200 from the service providers to bank accounts controlled by Sabatini, Alm said.

The government is seeking forfeiture of that money, he said.

The investigation of Rodrigues and his daughter in connection with the PGMA contracts was disclosed in June 1999 by the Honolulu Star-Bulletin, but federal prosecutors at the time declined any comment.

In a story in January 1998 on the state’s closure of PGMA, the newspaper disclosed payments from PGMA to Four Winds RSK, Inc., which Sabatini incorporated in 1996.

Alm said the investigation began three years ago, based on information provided by the Honolulu Police Department. He declined to disclose that information.

According to the indictment, Rodrigues initiated the scheme in 1992 when he negotiated a contract with HDS and arranged for consulting fees to be paid to a man, now deceased, with whom Rodrigues had a personal loan, Alm said.

In 1994, Rodrigues told HDS to hold the consulting fees until further notice, but in 1996 had HDS send a check for $25,381 to Sabatini’s company, followed by three more checks that year totaling $20,945, according to the indictment.

In 1997, four checks totaling $45,358 was sent to Four Winds RSK, for consulting work for the union that was not performed, the indictment says.

Alm said that in 1998, Rodrigues asked HDS to pay the consulting fees to the Voluntary Employees’ Benefit Association of Hawaii, for which he was a director, rather than to Four Winds RSK, whose assets were all transferred to Auli’i, a new company incorporated by Sabatini under her middle and married name, Haunani Sabatini, after the Star-Bulletin article.

Rodrigues and Sabatini then had HSD send three checks totaling $32,173 to Management Applied Programming Inc. (MAP), an affiliate of VEBAH, rather than directly to Auli’i, Alm said.

MAP then mailed consultant fees to Auli’i in 1998 totaling $59,093 in 1998, according to Alm.

As part of the scheme, Sabatini in December 1996 purchased a cashier’s check of $14,213 payable to Honolulu Ford drawn on Four Winds RSK’s account with which Rodrigues the next day purchased a 1997 Ford Ranger truck, putting the title in his name, Alm said.

Sabatini and Rodrigues have played prominent roles on Kaua’i in local affairs. Sabatini successfully fought off a proposed retreat development in her neighborhood last year, and Gary Rodrigues was the point man in efforts to try to locate a 2,000-bed, medium-security prison on Kaua’i.

The prison idea for Kaua’i was later scrapped by Governor Ben Cayetano after widespread community opposition.

Known in the halls of the Legislature as “the 26th senator” for his influence there, Rodrigues has been an untiring champion of pay raises and other benefits and legislation beneficial to his UPW members who last year re-elected him to another three-year term.

He has also been an outspoken critic of state privatization efforts, which would likely cost union jobs.

A lifelong proponent of privatization is state Rep. Ezra Kanoho (D-13th), who noted he has had disagreements with Rodrigues over the years but still respects him for everything he has done for his union’s members.

“Anybody who is so accused, we feel sorry about, and hope it’s not true,” Kanoho said. “We hope for the best for all involved.”

Kanoho said he got word that the federal indictment was forthcoming about a week ago.

“Gary Rodrigues has been a very influential figure, and he should be commended for that,” Kanoho said.

Kanoho said it’s probably too early to tell whether or not privatization measures pending before this year’s Legislature would have a better chance of passing without the vigorous lobbying efforts against such bills by Rodrigues

TGI staff writer Paul C. Curtis and Associated Press writer Bruce Dunford contributed to this report.